How Obamacare Actually Paves the Way Toward Single Payer

January 6, 2014

Last week the liberal documentary-maker Michael Moore prompted indigestion across the progressive wonk community by pronouncing Obamacare “awful.” In a New York Timesop-ed, he bemoaned the way the president’s law preserved the health insurance industry rather than replacing it with a Medicare-for-all style single-payer system. The good news, Moore conceded, is that the previously uninsured (and often previously uninsurable) can get finally get coverage. The bad news is that their coverage will often be lousy and pose an enormous financial burden. He ended by calling for activists to lean on state politicians in an effort to beef the law up.

I happen to agree with Moore’s basic sentiment. For-profit health insurance is on some level morally offensive—at least when it’s practiced the way we Americans practice capitalism. With a few tantalizing but mostly unrepresentative exceptions, the longstanding aim of health insurers has been to weed out sick people, and to weasel out of paying for treatment if they somehow get insurance, so that the companies could boost their share price, lavish income on their executives, and plow money into annoyingly saccharine TV ads. To its everlasting credit, Obamacare genuinely tries to whip the insurers into shape—making it illegal to deny coverage to sick people, or to withdraw coverage when healthy people get sick, among other much-needed reforms. But you still have to be skeptical of middlemen who historically spent a mere 60 cents of every dollar individual policy-holders sent them on, you know, health care.1

And yet I’m still much more sympathetic to Obamacare than Moore. He thinks it’s awful. I consider it a deceptively sneaky way to get the health care system both of us really want.

How? Allow me a brief digression: In 1991, Congress created the National Breast and Cervical Cancer Early Detection Program, which funded screenings for women who earn up to 250 percent of the poverty level. What Congress didn’t do is provide money to pay for treatment if the tests came back positive. The policy seemed sadistically cruel: Suddenly thousands of women would discover they had a life-threatening illness while realizing they could do nothing about it. Both Moore and I would have surely denounced the law. But it soon proved to be a shrewd, if unintentional, opening move. “Almost from the moment it was implemented, there was pressure to take the next step,” says Harold Pollack, a professor of social policy at the University of Chicago. “They constructed a sympathetic and organized constituency … with an actionable grievance.” Congress approved the money for treatment in 2000.

In some sense, Obamacare is the breast-and-cervical-cancer story writ large. In order to move the law through the Senate, the White House had to make all sorts of noxious compromises, like keeping the overall spending under $1 trillion, which limited the subsidies available to people buying insurance. Hence the kind of horror-stories Moore cites in his op-ed: A 60-year old couple with an annual income of $65,000 who could end up spending $25,000 on health care in a single year. And that’s with Obamacare. (This is something of an outlier, but not that much of one.) But the flip side is that the law also created potentially millions of hard-working Americans who will have some health insurance; just maddeningly insufficient health insurance. What are the chances politicians stand up and take notice when these Americans complain?

In the heat of the political back-and-forth with Republicans bent on the program’s destruction, this whole Obamacare adventure can feel a little hopeless. But when you look at the big picture, the underlying political logic is clearly toward more generous, more comprehensive coverage over time. Once the previously uninsured start getting insurance, the natural upshot of cataloguing the law’s shortcomings isn’t to give them less insurance, as my colleague Alec MacGillis pointed out last fall. It’s to give them more. Republicans are in some sense playing into the trap Obamacare laid for them. And a few of them seem a bitconcerned about it.2

Medicaid expansion is a case in point. Under Obamacare, uninsured people who earn up to 138 percent of the poverty level (just under $16,000 for a single person in 2013), can qualify for Medicaid, at least in states that opt into the law.3 This has a few key political consequences, as Pollack notes. First, it transforms the political constituency for the program. Historically, Medicaid has served extremely poor, frequently minority, patients who either don’t vote or support Democrats when they do. That meant the GOP had no hang-ups about squeezing it. But there will likely be millions of white working-class voters on Medicaid in the coming years. (Even in some conservative states, like Arkansas, Kentucky, and West Virginia.) Once that happens, something tells me Republicans will become more charitably-disposed to the program.

Then there’s the likelihood that, one day soon, especially if Medicaid becomes more generous, the working-class person who makes 175% of the poverty level will look at his working-class neighbor making 130% of the poverty level and think, wow, his health insurance seems a lot better than my private Obamacare plan. How long can it be before most people earning 175% or 200% of the poverty level are allowed to buy in, too?4

The same goes for Medicare. Many health-care reformers believe some version of Obamacare—government-subsidized private insurance—will eventually replace Medicare, something that will surely become more likely if voters feel warmly toward Obamacare and demand to keep it when they turn 65. But if private Obamacare plans stay stingy, the opposite may happen: As people age out of Obamacare and into that single-payer program we all love and support, their fondness for Medicare will only increase. Before long, their slightly younger friends and family members will be clamoring to join Medicare, too. How long before some opportunistic pol proposes that everyone on Obamacare who’s 55-and-up can enroll in Medicare? Not very long, I’d guess. In wonk terms, progressives are likely to get their beloved public option one way or another, and probably not too far in the future.

The basic point is that, by pooling millions of people together in one institutional home—the exchanges where customers buy insurance under Obamacare—the Affordable Care Act is creating an organized constituency for additional reform. And since threadbare coverage is the only affordable option under Obamacare for many of these people, the law is giving them a whole set of grievances to get exercised about.

Granted, all this prophesizing assumes the exchanges will work, something Republicans seem determined to prevent. (For that matter, so did the Obama administration for a few months last year.) If the sick and old make up the overwhelming majority of enrollees, or if the back-end of HealthCare.gov never gets ironed out, the whole project could collapse. But if we do clear those thresholds in the next year or so—and the recent data points are encouraging—the relentless logic of the exchanges will be hard to stop. More and more people will be covered through the exchanges. (And not just the uninsured: The Congressional Budget Office estimates that three million people will move from employer-based coverage to the exchanges over the next five years.) Which means the constituency demanding better insurance will get bigger and more powerful each year.

In the end, I’ll bet liberals like Moore develop a grudging respect for the administration on this front. (And believe me, I understand the tendency to second-guess.) Moore writes as though Obama created a complete dog of a program, then shrugged off any responsibility to improve it: “Obamacare can’t be fixed by its namesake. It’s up to us to make it happen.” But flawed as Obamacare is, it has at least one great virtue: laying the groundwork for its own fixing.5 That’s not bad for such an “awful” piece of legislation.

Noam Scheiber is senior editor at The New Republic. Follow @noamscheiber.

Obamacare now mandates that they spend 80 cents per dollar on health care.

It’s worth recalling that Medicare followed a similar trajectory: Democrats didn’t fare very well politically in the years after it became law. But the long-term political benefits are indisputable.

Don't get me wrong: I don't think Obama intended to set us on the path to a single-payer system. But I'd be surprised if the administration didn't anticipate being able to strengthen the law over time.